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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 3, Problem 18E
Textbook Problem
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Adjustment for depreciation

The estimated amount of depreciation on equipment for the current year is $8,200. Journalize the adjusting entry to record the depreciation.

To determine

Prepare the adjusting entry at the end of the year.

Explanation of Solution

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle.  All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

  • Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
  • Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

An adjusting entry for depreciation expense:

In this case, the business recognized the depreciation expense at the end of the year. So, the necessary adjusting entry that the business should record for the depreciation expense at end of the year is as follows:

...
DateDescription

Post.

Ref

Debit

($)

Credit

($)

 Depreciation expense 8,200 
 Accumulated depreciation-Equipment  8,200

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Chapter 3 Solutions

Financial And Managerial Accounting
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